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5/03/2012 @ 4:28PM13,556 views

Netflix CEO Reed Hastings Blew $12 Billion In Market Cap. Why We Should Listen To Him About Education

Netflix cofounder Reed Hastings is known for making the biggest business blunder of 2011. In July, he announced that subscribers to both the Netflix streaming and DVD service now had to pay for each separately, a sudden 60% increase that took the Netflix subscription from an $8 a month charge you barely noticed on your statement to a $16 a month charge you definitely noticed. To make matters worse, in September, Netflix spun off its popular DVD-by-mail service into a new entity called Qwikster.

These rare missteps caused Netflix’s stock price to crater from a high above $304 a share in July to a low of around $62 a share by late November; a market cap loss of around $12 billion. Though Hastings later announced that Netflix was canceling its plan to spin off its DVD unit, the stock carnage continued. Compounding Hastings’ summer blunder was the subsequent loss, on February 28, 2012, of streaming content partner Starz, which controls the rights to films from Disney and Sony. Netflix traded thursday around $76 a share.

At most corporations, three major missteps, conjoined with a precipitous loss in shareholder value, would engender an immediate escort out the door. Not at Netflix. As with most Silicon Valley companies founded by entrepreneurial wunderkinds (read: Apple, Facebook, Google), Hastings controls a large number of Netflix shares. He’s also Chairman of the Board, President, and Chief Executive Officer. It’s thus, hard to oust him. Just as it will be hard to oust Mark Zuckerberg no matter how many tech startups he buys without consulting his board (read: Instagram).

Maybe this is a good thing. After all, Hastings understands the future of entertainment, even if he seems to lack the twisted moxie to successfully negotiate with Hollywood’s content Svengalis. And, as I learned from Hastings at the stellar Education Innovation Summit in Scottsdale, Arizona, the former math teacher has used his teaching, technology, and entertainment industry experience to understand the future of education too.

One may disagree with Hastings’ storied emphasis on competition, technology, and accountability as three pillars of education reform, but one cannot deny that he personifies, in his very mien, the friendly open source accessibility that should be the hallmark of education innovation efforts. As busy, wealthy, and influential as he is, Hastings still made time for this reporter’s questions and those of many others. No gatekeepers. No self-serving websites. No memoranda on what could or could not be discussed. That is all you need to know about how intimately Hastings gets this new “Internet Age” of education in his DNA.

Below are excerpts from Reed Hastings’ Education Innovation Sumit talk, followed up tomorrow by my interview of him.

Reed Hastings: Stone Age. Bronze Age. Iron Age. We define entire epics of humanity by the technology they use. In fact, technology has been the story of human progress from as long back as we know. In 100 years people will look back on now and say, “That was the Internet Age.” And computers will be seen as a mere ingredient to the Internet Age.

The Costa Rican government is prioritizing laying fiber optic over paving roads. Costa Rica is trying to become one of the Internet societies. This is happening throughout the world. In Australia, they bought the AT&T of Australia, Telstra, with taxpayers’ money, so they could upgrade the entire copper infrastructure to fiber and, with a national broadband network, bring a gigabyte to every citizen. Because Australia wants to define itself as one of the most wired nations on earth. In Finland, it’s now an enshrined right in the law that you have access to broadband. Google is laying fiber to every home in Kansas City. And they are going to be offering gigabyte Internet at a very aggressive price. It will be transformative in Kansas City. And from that, every other big city mayor is going to say, “Why aren’t we doing that?”

So, around the world we have this transformation in connectivity. I hope that it will mean that there is great global movie and TV show services. It will mean lots of scenarios of SKYPE and telemedicine and others. But it will also mean tremendous opportunity for all of us in the Ed-Tech space.

Many people think about the challenge as America vs. the World. Like, “We got to keep ahead. China’s doing this and India is doing that.” That’s all good. But, fundamentally, we have a huge opportunity and investment that every kid in Nigeria, every kid in Pakistan, every kid in South Africa, every kid in Brazil gets a good college education. We will live in a much better world if we can pull that off. So, I don’t particularly ascribe to, “We got to do this for the future of America.” We have to do this for the future of humanity. The big technologies, like the Internet and online learning, are about advancing human existence. And that’s what’s exciting for all of us to be involved in and to figure out, “What part of the puzzle are we going to solve?”

When we think about online learning, it’s such “early days.” Bill Gates is a wildly smart insightful guy. Yet, even a guy as smart and insightful as that, 30 years ago can say things like, “Who’s every going to need more than 640K of memory?” Because it was almost inconceivable, at least to his then young mind.

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Those are Hastings’ words, you realize. And the subject of Costa Rica did not come up in my short interview of him, which appears tomorrow. In my cursory search before posting the words from his talk, I I was not able to find a corroboration of his point about Costa Rica. But I am just quoting what he said in the Education Innovation Summit talk, so the responsibility is his. Maybe he will respond here.

Every world citizen will gain all human knowledge from the internet, teachers will teach humanity, and we will all live happily ever after. How absurd. When will we stop moving forward to “something” simply for the sake of moving forward? College degrees no more make the man than his suit. There are plenty of college graduates living below the poverty line in this country and other developed countries. Why does Reed Hastings and so many other powerful men (I’m sure) delude themselves into thinking that knowledge redeems humanity? It hasn’t happened yet. In fact, history continues to reveal great learning and incomprehensible cruelty (and an obscene amount of material support by wealthy sympathizers) go hand in hand. We also have noxious sets of standards for every core subject taught in schools to ensure what? Have standards ensured anything yet? What’s the problem? Who’s to blame? If we are going to lay the onus of preserving humanity upon teachers, they will need standards. Who will define the set of standards for producing humans? We haven’t even managed to produce competency in math and reading after a decade of this insanity. This all goes in the wrong direction. Forward is the wrong direction for education. Less is more and the way Aristotle learned is how to better educate — the standards were simply all that went before. No computers required. As far as elevating humanity goes, the problem is not poor education. Neither is it no access to knowledge. It is greed, purely and simply. There is no college degree that cures man of his greed and lust for power. There is no school that does. Is there anything that does?

Actually, in my experience, an education grounded in shared inquiry of the great works and great questions of world civilization, as found at St. John’s College Santa Fe, is an antidote to the ills you cite. And no special technology is required. See my article on St. John’s here. I also did a follow-up piece on how St. John’s was voted the “most rigorous” school in the land, an antidote to your other claim. See that article here.

I don’t disagree that there is a trace of utopianism in Mr. Hastings’ remarks. It is a trope that flows through most grand pronouncements in Silicon Valley. They are called techno-futurists for a reason. That said, moving “forward” does not mean we will neglect what has come before. And I don’t think Mr. Hastings is advocating for that. I also don’t think he is advocating for “knowledge” as the answer either. He says knowledge is needed, but that it can be taught by computers. And, from a cost-savings perspective, he has a point. But he doesn’t believe that education stops at knowledge. I think he believes wisdom, aesthetics, and more ambiguous kinds of gnosis are also part of the equation. And that’s where human instructors come in. And, dare I add, that is precisely where schools like St. John’s College Santa Fe, modeled as they are on Aristotle’s and Plato’s own pedagogies, also come in.

I agree that we have regressed. But I think there is hope. The Irish famously “saved civilization” in the past. We are at a similar hinge moment now. And I won’t let it pass without a fight. Perhaps you will join me.

I am looking for a good fight. I just haven’t found one yet. I started one, but not even the people who cheered me on joined me — they only turned their backs once I lost my lone battle. You tell me where there is a good fight, and I will be there.

Per your suggestion, I read your article on St. Johns. Immediately, I spoke to my spouse about the program there because it closely parallels the school I want to start. Having read your reply to a comment on the article, claiming you would love to see a “great books high school”… well, I’m working on starting one. Can you point me in the direction of funding? Would St. Johns be interested in partnering with such a school?

I hear your point about techno-utopianism. And I think Hastings might be guilty of some of that. I also agree that a college degree in no way makes the man or woman. You and I are in agreement on the way forward. It is a return to the classics and classical pedagogy.

Reed Hastings is a perfect example of the few top people who rule the world, he and his peers, Brian Roberts, Sumner Redstone, Robert Iger, and Rupert Murdoch have been carefully groomed to rule by the less than one million people who man the TV and movie industry. Could it be Hastings who ordered the “hit” on my computer? Hollywood sure doesn’t like my remarks, they’d rather remain in the shadows behind the blue glow of the TV, calling the shots for you and me. It got really obvious when I hit Charlie Sheens web-site and my computer went wild with warning messages… simple, Hollywood web-site, Hollywood Hackers! But, this article, among others, makes it obvious how tenuous and fragile the influence of the Evil Entertainment Empire is… simply Turn Off the TV and watch their power wither!